While I am not the OP, I can tell you why I took the govt's money at 62, even though I probably didn't "need" it.
The dirt simple answer is that the gov't taxed me to get the SS money for other people all of my life. The promise was that they would pay me when I got old. I had no choice, no opt-out -- they took the money under threat of criminal action against me if I didn't pay it.
I knew at the time it was a bad deal. If I could have invested that money on my own I would be much better off today. So, I did the next best thing. I took it at the earliest opportunity and used it for living expenses. I left my money invested and growing.
There is nothing wrong with this. The government made the rules. I put in the effort to understand them and made the choices I thought would be best for me.
P.S. The common advice to postpone taking SS in order to get a higher benefit is highly suspect. The boys and girls at the SS administration calculate all of their examples without taking the time value of money into account. But if I owe something to Uncle, the friendly folks over at the IRS know all about this time value thing and charge me interest.
Common advice to postpone taking benefits to receive a higher benefit is not
“highly suspect” as you say.
It makes perfect sense for some - me for instance.
Doesn’t make sense for some others.
It’s an easy calculation to see how long you have to live to catch up.
Factor in the taxes you would have paid on the early benefits and what you could have earned on the money - it’s all there - do the computations.
It works or it doesn’t.
The dirt simple answer is that the gov’t taxed me to get the SS money for other people all of my life...
That’s a very salient point: that money was stolen from us for the time we worked . It is NOT gov. giving us anything. It is our money they took.
HAD it been invested, etc. the amount would far exceed what we get back. Now, would that have happened with each and every recipient? Probably not but then the onus would be solely on them.
As it is we are at the mercy of stupid government creating economic chaos out of their misguided policies.
Inflation is eating away at nest eggs at a ridiculous pace. So yeah, a few percent increase seems paltry and doomed to put old folks further behind.
I’m retired, but I’m 60 so not yet eligible for SS benefits. I keep thinking about when to claim once I get to that point and I have a hard time coming up with a good argument for waiting past 62. My SS full retirement age is 67, which makes the break-even point for claiming at 67 versus 62 17 years out from 62. In other words, if I waited until 67 to claim I would not start to see a financial advantage to that decision over claiming at 62 until I was 79. That’s a powerful incentive to claim early, even though I know life expectancy is longer these days.
The bottom line is that any decision is a gamble, since none of us know how long we’ll live, and therefore the best decision depends greatly on personal circumstances. I just figure that having to wait until 79 years old to begin to see any financial advantage to waiting could be a bigger gamble than claiming at 62. And those earlier years after retirement are when we’re most likely to feel like doing things like traveling or engaging in active hobbies, so we’re likely to spend more money during that time than when life inevitably slows down (with the acknowledgement that increased medical expenses later will certainly balance out that equation somewhat).
“The common advice to postpone taking SS in order to get a higher benefit is highly suspect. The boys and girls at the SS administration calculate all of their examples without taking the time value of money into account. But if I owe something to Uncle, the friendly folks over at the IRS know all about this time value thing and charge me interest.”
The details of your post are correct—but the conclusion is not.
It is actually a fairly complex calculation and is based on your life expectancy—which belongs to you and is not based on an “average” person’s life expectancy.
Both my parents lived into their mid-nineties so my “best guess” on life expectancy has to be that number.
That is one reason why I waited until 70 to collect SS.
The other reason is that my wife’s benefit will be based on mine because she has a much lower earning history.
The “best” decision is different for each person and their situation.